UPDATE 1-Itaú's Setubal urges passage of Brazil labor reform

Reuters Staff

2 Min Read

(Adds Setubal comments on Brazil political situation)

By Guillermo Parra-Bernal

SAO PAULO, June 24 (Reuters) - Brazilian lawmakers need to urgently pass a revamping of the country’s outdated labor code in order to mitigate extra costs for companies and consumers, the co-chairman of Brazil’s largest bank said on Saturday.

The excessive rigidity of Brazil’s labor legislation is creating an enormous burden for citizens, who end up paying more for the goods and services they buy, said Roberto Setubal, the co-chairman of Itaú Unibanco Holding SA.

Speaking at an event sponsored by XP Investimentos SA, Setubal said political turmoil is unlikely to ease in coming months, posing challenges to President Michel Temer’s ambitious economic reform agenda. Successful policymaking has so far help mitigate those risks, he said.

“People need to understand that reforming an outdated labor code is good for business but, ultimately, for consumers, who are overburdened by market inefficiencies,” Setubal said at the event.

His remarks underscore how political problems are delaying efforts by Brazilian business leaders to regain competitiveness in the face of a bloated state structure and rigid industry rules. Temer wants to pass a pension and tax code reforms, aside from the labor plan.

XP INVESTIMENTOS

Itaú paid 5.7 billion reais ($1.76 billion) for the 49.9 percent stake in May to grow in the retail brokerage and money management segments. Setubal said that keeping XP as an independent financial firm is good to help deepen capital markets activity in the long run. (Reporting by Guillermo Parra-Bernal; Writing by Marcelo Teixeira; Editing by Marguerita Choy)